Johannesburg, November 29, 2024 – A severe storm that struck parts of Randfontein and Westonaria in Gauteng this week left a trail of destruction, injuring 24 people and causing extensive damage to infrastructure.
Among the worst-hit areas were homes, a shopping centre in Toekomsrus, and a block of flats, with many properties losing roofs, windows, and walls.
Chris Brits, founder and CEO of Riskonet Africa, says businesses need to be aware of the increasing frequency and intensity of extreme weather events and the critical importance of risk management and adequate insurance coverage.
“The tornado or landspout that hit Randfontein is yet another indication of the severe weather patterns we are seeing more frequently, and these events have far-reaching implications for both private property and commercial businesses,” says Brits. “This storm is a stark reminder that businesses and homeowners must not only assess potential exposures to isolated risks but also consider the compounding impact of catastrophic events that can affect multiple aspects of their assets simultaneously.”
Brits says that many businesses tend to focus on a single risk event, such as a fire, but fail to account for disasters that can destroy stock, offices, production equipment, utilities, customer and billing records, and cause injuries to staff all at once. “This degree of damage can compromise the financial stability of any business,” he warns.
For homeowners and small businesses, one of the most significant risks during such disasters is underinsurance. Brits says most policies base the sum insured on the Estimated Replacement Cost of assets. However, without regular property valuations, policyholders often find themselves underinsured, leading to devastating financial losses when claims are made.
“Take, for example, a residential client insured for R200 000 but whose total household contents are valued at R300 000. If a total loss occurs, the insurer could apply the principle of average, paying out only two-thirds of the claim, or R133,333. This means the homeowner would only be able to replace a portion of their possessions, compounding the distress caused by the disaster.”
Riskonet Africa is urging property and business owners to prioritise regular valuations to ensure their insurance policies reflect the true value of their assets. “A good valuation not only ensures adequate coverage but also expedites claims processing, providing much-needed financial relief during difficult times,” Brits says.
He also warns that underinsurance is particularly prevalent in South Africa, with many clients failing to declare accurate values for high-value items such as art, jewellery, and antiques. “Without agreed specific values for these items, policyholders may face significant shortfalls during claims settlements.”
Brits says: “As we face increasingly volatile weather patterns, South Africans must adopt proactive risk management strategies. Regular valuations, comprehensive insurance reviews, and collaborating closely with brokers to assess vulnerabilities are essential steps to safeguard both personal and commercial assets.”
